Solar module prices in free fall

Good news for fans of grid parity:the price of photovoltaics is in free fall.

Selling prices for modules made from crystalline silicon will drop to $1.00 per watt by early 2012, according to new research from IHS iSuppli.

Announcing the findings, IHS iSuppli notes that only two weeks ago –prior to last week’s Intersolar Trade Fair in Munich - prices had already declined to $1.49 per watt.

“By the time Intersolar wound up, prices had fallen to $1.30 per watt, ostensibly hastened by the market’s fear toward a flat—or worse, negative—market in 2012,” IHS states in a press release.

That’s almost as precipitous a drop as the Oakland Athletics’ winning percentage this month.

“The recent price decline was quickened by top-tier module brands dropping prices to aggressively position themselves, in the face of fears that the industry could be headed toward a down market next year,” said Henning Wicht, senior director and principal analyst, photovoltaics, at IHS.

“Not only could such a development ward off a dip predicted in solar installations for 2012, it also signals that deep-pocketed and lower-cost structured companies will be getting aggressive about pressuring competition out of the market during the next year,” added fellow IHS analyst Mike Sheppard in the release.

Of course, there’s more to the end-user price than just the module. Sheppard noted that overall system prices will be around $2.00 per watt, including inverters, cabling, racking, installation and other factors.

When those factors combined with the module come down to $1.00 per watt, then, voila, maybe we have grid parity that will improve solar’s ability to compete against fossil fuels.

“At $1.00 per watt we will have achieved grid parity in many regions; however that is not the only prerequisite for the solar market to grow,” said Sheppard in an email exchange with SmartPlanet. “There must be other elements that favor PV such as a need at the grid level for distributed power generation in order for us to see the real adoption in a market without subsidies.”